Hungary frees €6.6 billion for Ukraine arms

Hungary's new government has lifted its two-year veto on the European Peace Facility, the EU fund used to reimburse countries that sent weapons to Ukraine. The money now released amounts to €6.6 billion. Claims already filed by member states stand at roughly €43 billion. In practice, donor countries will recover about 15 cents for every euro they spent.

The decision came as part of a wider bargain. In nine days, Budapest secured €16.4 billion in previously frozen EU structural funds, a minority-rights agreement with Ukraine covering Hungarian-language schools and public administration in Transcarpathia (kormany.hu), and German diplomatic support. Chancellor Merz, meeting Prime Minister Magyar in Berlin, promised to help Hungary return "back to the centre of Europe."

The Reimbursement Squeeze

EU foreign policy chief Kaja Kallas has proposed splitting the €6.6 billion between reimbursements to member states, the EU mission training Ukrainian troops, and direct arms purchases for Kyiv (EEAS, Do Rzeczy). The European Peace Facility was originally meant to cover about 40% of the value of donated equipment. Under Kallas's formula, that falls to roughly 10%.

Slovakia's Defence Minister Robert Kalinak put the shortfall most clearly: Slovakia expected €250 million and will now receive approximately €25 million. Bratislava donated MiG-29 fighters and S-300 air defence systems, and will recover only a fraction of their value. Poland faces the same squeeze (Euronews). Poland, Slovakia and Germany all rejected Kallas's proposal at the June 8 meeting of defence ministers.

Who Paid, Who Collected

The political account is hard to miss. Hungary, which never sent weapons to Ukraine, blocked the fund for two years and then lifted its veto after securing €16.4 billion in unfrozen EU money and a Ukrainian minority-rights settlement. Slovakia, which emptied part of its armoury, will recover a tenth of what it expected.

This is not an accounting accident. The European Peace Facility was created in 2021 for limited peacetime burden-sharing, with an original ceiling of €5 billion over seven years. Russia's full-scale invasion broke that model. The ceiling was raised to €17 billion, but member states transferred weapons worth far more than the fund could repay (Kyiv Independent).

For Malta, the lesson is familiar from other EU fights: the legal design matters as much as the political declaration. A small state normally values unanimity because it prevents large capitals from pushing through decisions alone. But the same veto can also turn one government into a gatekeeper for the whole Union, even when the cost is carried by others.

The Workaround Architecture

The EU has already started building around the European Peace Facility. SAFE, a €150 billion loan facility for European defence procurement, works by qualified majority voting, where decisions need a weighted majority and no single state can block alone. Poland received its first €6.6 billion SAFE tranche on May 29. The Ukraine Support Loan, worth €90 billion, uses enhanced cooperation, which allows a group of willing states to move ahead while others stay out. The European Peace Facility is now the smallest of the EU's military-financing tools, and the last one where one capital can stop everything.

Lifting the veto once does not change that structure. A future Hungarian government could block the fund again because unanimity remains written into the EU treaty rules governing this area. Germany's foreign minister has called for foreign policy to move from unanimity to majority voting (Deutschland.de), but triggering that change also requires unanimity. At least ten member states oppose it.

The Pending Fights

Kallas's compromise has not yet been adopted. The final allocation formula still needs agreement in the Council of the EU, where national ministers negotiate and legislate. Poland, Germany and Slovakia are contesting the current plan.

There is also unfinished litigation. An Orbán-era case against using frozen Russian asset revenues for the European Peace Facility remains pending before the EU Court of Justice. The Magyar government has not withdrawn it.

The facility still matters, but less than it did. SAFE and the Ukraine Support Loan now operate at several times its scale. The European Peace Facility has become a reimbursement queue for weapons already sent. The countries that moved first are now waiting in a line where the payout keeps getting smaller.